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The Berlin International Film Festival has always put politics and cinema on almost equal footing, but this year there was a special focus. The Berlinale had invited Iranian director Jafar Panahi to serve on the festival jury, but in December, Panahi was sentenced in Iran to six years in prison.

He was also banned from making films and traveling outside the country for 20 years. Still, his presence was strongly felt at the festival; some attendees draped photos of Panahi around their necks and wore green scarves.

Standing next to Panahi's empty chair, Isabella Rossellini, the festival's jury president, read an open letter from him. "They have condemned me to twenty years of silence. Yet in my dreams, I scream for a time when we can tolerate each other, respect each other's opinions, and live for each other," wrote Panahi.

Iran has a rich history of filmmaking, and its movies are celebrated at home and abroad. Due to its numerous fans, the country's daily cinema newspaper can sell out within hours.

But when Panahi and another filmmaker, Mohammad Rasoulof, were found guilty of "propaganda against the system" for starting a film about Iran's 2009 post-election chaos, it was just the latest sign that things have gone terribly wrong, said Iranian director Rafi Pitts.

"It's a nightmare that he's living, and it's a nightmare that the film industry is living," Pitts said. "And it's never happened in the history of cinema. Even during the McCarthy purges in America, it never got to this stage, where for an idea you would get a prison sentence."

Pitts lives in Paris but makes films in Iran. His latest work, "The Hunter," tells the story of a grieving man pushed to violence. It screened at last year's Berlinale, but it's banned in Iran.

"All we wanted to do is hold a mirror up to society. If what the government sees in the mirror is something they don't like, that's not the mirror's fault," Pitts commented.

The government's tactics have forced filmmakers to try to game the system, said another Iranian director, Sepideh Farsi.

"Sometimes some people go with fake scripts and shoot something else, and that happens. But I generally have just given them the script that I had," Farsi said. "But the problem is you can never trust them. Because you give them the script, they give you a shooting permit, and then when the film is ready, they tell you, 'but this cannot be released because of such-and-such problem.' So you never really know where the red line is, and where the boundaries are."

Weary of the rules, Farsi shot her recent film, "Tehran Without Permission," with a cheap mobile phone, and used the music of underground rappers for the soundtrack.

Another director, Ayat Najafi, plans to head back to Iran on Monday for the first time in four years. He is starting a new film – without a government permit. Najafi hopes to get around that by shooting in private homes, though that method did not keep Jafar Panahi from danger.

"It's not like when you are working at home, they are going to catch you. But they were looking for a moment to arrest Jafar Panahi and then they found the moment," said Najafi.

Still, there are Iranian directors who manage to make art within the system. Asghar Farhadi won the Berlinale's best director prize in 2009, and is a leading contender for this year's top award.

His film, "Nader and Simin: A Separation," tells the story of a couple on the edge of divorce, but touches on gender, class, and religious issues. Some Iranian exiles have criticized Farhadi for playing by the rules; Farhadi finds that frustrating.

"What's their suggestion? Shall we all leave the country? What about the people of Iran? We should make films for them. I'm not working with the government; I'm making films for the people of my country. And I will stay there and I will make films for them," he said.

The Berlinale awards its prizes on Saturday. In some ways, Farhadi's film has already won. It's being picked up for distribution in Europe, Scandinavia, and the United States.

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